2022 (5) TMI 1254 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - An amount of Rs. 3,89,265/- were due against the respondent which was not paid. Although, the contention has been raised by the Ld. Counsel for the respondent that different amounts has been mentioned at different conjuncture but as discussed, it is clear that the principle amount of Rs. 1,78,992/- were due whereas, an amount of Rs. 2,10,273/- were due as interest. Therefore, the said amount has not been paid by the respondent. Despite the fact that the demand notice was raised by the applicant on 03.12.2019. Hence the applicant succeeded in proving the fact that the above said amount was due against the C.R. Strips which were sold by the applicant to the respondent and the said amount was not paid qua. It has been repeatedly held that the Scheme of the code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Resultantly, since there is no dispute raised by the Corporate Debtor, in fact the corporate debtor has clearly admitted that a default has occurred. This Tribunal is of the affirm view that there was default on the part of the respondent in pursuance of invoices raised on behalf of the applicant, accordingly, the present application stands admitted in terms of Section 9(5) of the Code and CIRP is hereby ordered to be initiated against the respondent Corporate Debtor, forthwith - petition admitted - Moratorium declared.

Summary

Issues:
Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process based on unpaid operational debt.

Analysis:
The application was filed by Swastik Pipe Ltd., claiming to be the operational creditor seeking initiation of Corporate Insolvency Resolution Process against the respondent company. The operational creditor had supplied C.R. Sheets to the corporate debtor and issued a Demand Notice demanding payment of Rs. 3,89,265/- as unpaid operational debt. The corporate debtor did not submit a reply but argued the matter before the Tribunal.

The Tribunal considered the details of transactions and documents provided by the applicant. Ledger Annexure A2 showed that payments were regularly made, but a significant amount of Rs. 3,89,265/- remained unpaid by the respondent. Despite contentions raised by the respondent's counsel regarding different amounts mentioned, it was established that a principal amount of Rs. 1,78,992/- and interest of Rs. 2,10,273/- were due and unpaid. The Tribunal noted that the demand notice was issued, and the corporate debtor did not dispute the default, thereby admitting to the debt.

Based on the evidence presented, the Tribunal found a default on the part of the respondent in payment of the invoices raised by the applicant, leading to the admission of the application under Section 9(5) of the Insolvency and Bankruptcy Code. Consequently, Corporate Insolvency Resolution Process (CIRP) was ordered to be initiated against the respondent without delay.

The Tribunal appointed Ms. Ashu Gupta as the Insolvency Resolution Professional (IRP) for the corporate debtor, subject to certain conditions. The applicant was directed to deposit Rs. 2 lacs with the Interim Resolution Professional to cover expenses. The moratorium period under Section 14(1) of the Code was imposed on the corporate debtor, and other relevant provisions of the Code were to be followed during this period.

Additionally, instructions were given for communication of the order to the parties involved, the IRP, and regulatory authorities. Compliance reports were to be submitted, and necessary updates were to be made to official records. The order was to be served to all parties, and the file was to be consigned to the record room.